Slow Lion Reinstall

Mac came with Snow Leopard and I upgraded to Lion
All works fine except for the bloody beach ball visiting all the time.

Ok I have a complete install file but I can't fit it on any media that I have (file info says 3.7 gb ??)
Also have one of Apples mini USB sticks with what I think is the upgrade.
Maybe that's all I have downloaded that is 3.7gb?
How to tell?

Next question

What step by step process do I follow?
Have done it a squillion times on Windoze but never on a Mac.
Have Time Machine happening daily

Oh hang on, so you mean you want to do a clean install? By default, Lion will upgrade over the top of the system you have now...

So if I'm reading your first post correctly, you've upgraded from Snow Leopard to Lion, and now you want the performance hit of doing a clean install of Lion?

So next step would be to plug in the bootable USB drive thingy, and reboot to it (hold down option, the choose the Lion installer from the disks available. From there, you need to erase your current drive with disk utility and then clean instal lion.

But if you then restore from a time machine, you'll be bringing back all the same issues your current install has, so you might want to just manually install all the apps you need on your fresh install, and then move all your docs and stuff back later...

Yup. But take the opportunity to not install some a the crap you never use.

Office and photoshop are the only apps that take forever to install, everything else should be pretty quick. I'd be extra safe and create a bootable version of you current drive right with super duper on a spare drive, and just in case something happens to the time machine back up while you main machine is wiped. And don't copy dmg's to DVD, stick them on a hdd if you have room, or just redownload them..